12/01/1997 @ 12:00AM

An American original

FOLKS ARE ALWAYS misspelling Spencer Hays last name. They insist on adding an e between the y and the s. His high school yearbook in Texas got it wrong more than 40 years ago; more recently the Washington Post, trade publications, business databases and even Hays own executives have spelled his last name as Hayes.

So what does Hays do? Rather than risking embarrassing people by correcting them, he tolerates both spellings: In the Nashville, Tenn. phone book he is listed both as Spencer Hayes and Spencer Hays.

Its a small thing, but it shows how careful Spencer Hays is to avoid hurting peoples feelings. At 61 he has parlayed this sensitivity into a string of highly successful businesses with estimated annual revenues of $600 million and a personal fortune of maybe $400 million.

Hays companies — none alone big enough to make our list — sell, among other things, mens suits, books and health insurance. What many of these businesses have in common is this: They sell directly to consumers. What makes them so successful is Hays keen people sense. He knows how to motivate salespeople and teach them to reach out to the customers. A business is a reflection of the skills and attitude of the people in the business, says the bushy-eyebrowed Hays. You cant build a business — you build people. People build a business.

Hays has figured out how to leverage his own keen sense of selling by imparting it to others. His biggest outfit is the Tom James Co., which essentially invented the business of selling expensive suits to men in their offices or homes. His best-known company nationally is Oxxford Clothes Inc., the celebrated maker of handmade, off-the-rack suits starting at $2,000.

In publishing, Hays is majority owner of the Southwestern/Great American Co., a 140-year-old Nashville concern. It recruits college students to sell books on commission door-to-door during summers. His Athlon Sports Communications, Inc. is the nations largest publisher of sports annuals. He also has insurance, financial planning and real estate businesses.

Note that much of this involves selling things directly to the public — not through retailers or distributors. Says Hays longtime friend William E. Tucker, Texas Christian University chancellor: What Spencer sells is not a product, but people on themselves.

Hays describes the key to his management style as: People want to be led, not managed. He means by personal example. Associates recall how Hays would sometimes travel on the road for a week with a key salesperson who was experiencing a slump, working at reestablishing morale. Ralph Mosley, now chairman and chief executive of Southwestern, remembers the time in the 1970s that Hays left his family on Easter weekend and flew from Nashville to Indiana to work out a printing problem that an underling might have handled.

Another way Hays leads is by giving people who work for him a sense of ownership. Many of his employees, even below managerial levels, have stock. Beyond that he has let them know that they, rather than his wife or two daughters, will inherit the businesses when he dies. He has taken out sufficient life insurance to pay expected estate taxes.

Unencumbered, the businesses will then be owned by the people who built them.

Hays has also bankrolled ex-Southwestern salespeople with a good idea. Stan Ellis, a Houston financial consultant who sold books for seven summers, went to Hays in the early 1980s proposing a company that would offer estate planning services to a wealthy clientele. Thus was born First Meridian — with Hays putting up most of the backing but taking only a minority stake. With revenues of $4 million, the company is small but lucrative.

Labor relations are less than ideal in the garment trade, but Hays has built loyalty right down to the people who cut the cloth and assemble the garments. Spencer Hays is a very decent man, almost spiritual, says Jay Mazur, president of Unite, the big clothing workers union with about 3,000 members working at Hays-owned companies.

He has saved a lot of union jobs. Hays has done this by acquiring well-regarded but financially troubled clothing manufacturers at bargain prices and by using his sales skills to stoke revenues and build employment. Says Hays: We have a vision that one thing we owe society is job security.

Unlike a lot of self-made people, Hays has never ceased to sympathize with ordinary people. Born into a poor family in Ardmore, Okla. and reared by his mother and grandmother, Hays came of age in nearby Gainesville, Tex., 75 miles north of Dallas in the Red River tornado belt. He wasnt a big guy — just 5-foot-10 — but he became a star basketball player in high school. The same yearbook that mangled his name offered this prescient inscription: What a fine and manly fellow is this gentleman of fame; in everything he enters, full well he plays the game.

Hays won a basketball scholarship to Fort Worths Texas Christian University, where two important things happened to him: He saw his first Oxxford suit in a local mens clothing store and was immediately smitten; and during his freshman year he married his high school sweetheart, a move that necessitated a higher cash flow.

Thats what brought him to Southwestern/Great American. Dating back to 1856, Southwestern hired college students to sell a book line, then headed by bibles, in towns across the country. Selling came naturally to Hays. He remembers when he was 7 and his grandmother was trying to sell a litter of puppies. She put pretty pink ribbons around their necks so they would stand out, Hays recalls. It worked.

Then and now, Southwestern had a distinctive culture. Would-be salespeople undergo a one-week crash course — a combined boot camp and pep rally — that hammers home basic principles of selling and character- building. Some of the timeless rules: Work six days a week. Dont spend more than 20 minutes with a prospect. Keep on moving. Have faith in your product. Surmount rejection with eternal hope: Convince yourself that the next stop may produce the days best customer.

Perhaps the most important: Make the law of averages work in your favor by making lots of calls. You get enough marbles rolling, says Hays, and a certain number get to the other side. Hays devoured such books as Dale Carnegies How to Win Friends and Influence People, but he didnt really need them; he just kept thinking about grandma and the puppies. He regards doorbell-pushing as a great character-builder: If you can sell door-to-door, he says, you can do anything.

Upon graduation from TCU in 1959 — after a lackluster basketball career — Hays joined Southwestern and within a few years was virtually running the company. His ability to motivate people, to make them believe in themselves, was just what this business required. The company branched out from selling bibles to peddling reference books, cookbooks and childrens books. With separate sales forces it would later expand into other kinds of selling, including fundraising services, hospital flooring and even cancer insurance. Wanting to hold onto him, Southwesterns owners let him buy 12% of the firm for $50,000, payable over time. The business grew and grew.

In 1969 publicly traded Times Mirror Co., owner of the Los Angeles Times, purchased Southwestern for $17 million of stock — $2 million going to Hays. One of its chief assets: Spencer Hays. He soon became Southwesterns president.

But Hays chafed under big public-company control and in 1982 persuaded Times Mirror to sell back Southwestern, then a $30-million-a- year company, to a group of company officials he headed. In the circumstances many entrepreneurs would have gone public to raise money and lessen personal risk. But Hays reputation for moneymaking was so strong — and his confidence so great — that almost all of the $27 million repurchase price was borrowed.

Had he taken Southwestern public or brought in venture capitalists at the time of his LBO of the firm, Hays feels that the presence of outside owners would have changed the nature of the companys relationship with its employees. For one thing he could not have been so liberal with dispensing stock to workers. People have to be rewarded, he says simply.

The debt was paid off within four years, and Southwesterns revenues have risen to about $150 million.

Hays says he got into the clothing business because he had come to understand how important a good appearance was to salespeople. If you dress well, he says, You feel a little better and walk a little taller all day. But busy businesspeople dont have much time to shop. Why not sell custom-made mens suits office-to-office the way you sell books door-to-door? Since the suits wouldnt be made until the orders were in, inventory costs would be low and profitability high.

Thus was born in 1966 the Tom James Co. — named after the son of one of Hays former Sunday school teachers. Southwestern wasnt interested, but let Hays run the business on the side. He hired ex-Southwestern student sales personnel. As the business prospered, he began buying up suppliers. With the garment trade moving offshore, a lot of old companies were for sale, and Hays could buy them cheaply and, at the same time, earn the gratitude of the union by saving jobs.

Tom James Co. bought English American Tailoring, H. Freeman Sons, Oritsky Suit Co. and Individual Shirts Inc., all companies with well- known labels. Some make clothes for Tom James, others sell to the trade.

Hays-owned companies now do $350 million a year, and the business is growing 30% a year in an industry that is growing at a fraction of that.

Hays had long wanted to buy Oxxford, but had failed twice. Finally in 1994 he succeeded. Over the previous decade Oxxfords sales had dropped by a third as younger American businessmen flocked to Italian designers.

The Chicago-based company had gone through several recent owners, was losing big money and faced extinction.

Oxxfords revenues are up by a third, to perhaps $45 million, since Hays bought it. He recently persuaded 92-year-old Stanley Marcus, the legendary retired chairman of Neiman Marcus, to make an investment and join the Oxxford board. Trying to modernize Oxxfords creaky marketing, Hays produced two videos showing department store salesmen how to sell an Oxxford suit.

During an interview with FORBES, Hays was more than happy to demonstrate selling points. There are 850 hand-sewn stitches in each collar, so it lies flat, he intones, using the jacket he was wearing as an example. There are 1,350 stitches in the lapel, so it doesnt buckle. The pockets are constructed in such a way that if you put something bulky in them, they bulge in and dont bulge out.

Nor does Hays demeanor. Roger DiSilvestro is the chief executive of Athlon Sports Communications, which every year sells 1.1 million copies of such once-a-year sports books as Southeastern Conference Preview and National College Preview. DiSilvestro says that only once in his 21 years of working for Hays did the boss become visibly angry with him.

Reporting on a disappointing year at Athlon, DiSilvestro said, We tried our best.

Recalls DiSilvestro, He said, If you did your best, how are you going to do better next time? He wasnt mad at the results, but only at my description of our efforts.

Hays role in running these diverse businesses can best be described as management by walking — or telephoning — around. He borrows empty rooms at his various businesses to serve as a temporary office.

When traveling on business, he flies coach. When it comes to business, Im just cheap, he says. But not in his personal life. Hays is a great believer in enjoying what you have. His recently purchased apartment in Manhattan, where he and his wife of 41 years spend much of their time, displays originals by Matisse, Carrier-Belleuse, Degas and Gauguin. But he hasnt forgotten his adopted state or the college that gave him his start: Hays and his wife recently gave $2 million to Texas Christian University, on whose board he has sat for a decade, to build a theater.